Top Solar Incentives and Tax Credits in Michigan (2024 Guide)

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With solar energy adoption on the rise, Michigan residents and business owners have more opportunities than ever to benefit from significant savings. From federal tax credits to local incentives, a range of programs are available to help offset the cost of solar installation. This 2024 guide provides an overview of the most impactful solar incentives in Michigan, making it easier for you to take advantage of the financial perks and reduce your overall investment in solar energy.

1. Federal Solar Investment Tax Credit (ITC)

One of the largest incentives available to Michigan residents is the federal Investment Tax Credit (ITC), which allows eligible solar owners to claim a percentage of their installation costs as a tax credit. In 2024, this credit remains at 30%, making it one of the most substantial ways to lower solar expenses.

What It Covers: The ITC applies to residential and commercial solar installations, covering not only the cost of panels but also installation labor, permits, and even energy storage systems (like batteries) when installed alongside solar.
Eligibility Requirements: Homeowners and businesses who own their solar systems (rather than leasing) qualify for the ITC. To claim this credit, the installation must be completed during the tax year.
How to Claim the ITC: To claim the ITC, fill out IRS Form 5695 when filing federal taxes. A tax advisor can also help ensure all eligible costs are included.
Example Savings: On a standard residential system in Michigan, priced at $20,000, the ITC would save the homeowner $6,000 in tax credits.

The federal ITC is available until 2032, but the rate is expected to decrease gradually, so installing sooner rather than later maximizes savings.

2. Michigan Solar Property Tax Exemption

In Michigan, property owners who install solar energy systems don’t have to worry about an increase in property taxes. Under the state’s Solar Property Tax Exemption, any added value from solar installations is exempt from property tax, which can lead to long-term savings.

What It Means: Typically, home improvements like adding solar panels increase property value, which could lead to higher property taxes. With this exemption, that added solar value isn’t taxed.
Who Qualifies: Michigan homeowners and businesses installing solar systems on qualifying properties can benefit from this exemption. Be sure to check with local authorities to confirm specific eligibility requirements and application processes.

This exemption makes solar an even smarter choice, especially for those looking to increase their property value without tax implications.

3. Net Metering and Distributed Generation in Michigan

Through net metering and distributed generation programs, Michigan solar owners can send any excess electricity produced by their systems back to the grid in exchange for credits. This not only helps lower monthly energy bills but also speeds up the payback period on solar investments.

How It Works: Under net metering, your utility credits you for the electricity your solar panels send back to the grid, offsetting the power you use when the panels aren’t generating electricity (like at night).
Recent Changes in Michigan: In 2019, Michigan transitioned from traditional net metering to a distributed generation tariff structure. While similar, this structure applies slightly different rates for energy you send to and receive from the grid.
Calculating Potential Savings: For a residential customer with a 5-kilowatt system, the savings can range from $500 to $700 per year depending on the system’s efficiency and local rates.

With net metering, customers have the potential to achieve a zero-dollar energy bill, making it one of the most attractive aspects of going solar in Michigan.

4. Local Utility Company Solar Programs and Incentives

Michigan’s two major utilities, DTE Energy and Consumers Energy, offer programs and incentives to encourage solar adoption, making installation more affordable.

DTE Energy Solar Rebate: DTE periodically offers rebates for residential solar installations, typically based on the system size and energy generation capacity.
Consumers Energy Solar Rebates and Programs: Consumers Energy has also been active in offering various rebate programs, including incentives for those participating in their distributed generation program.
Community Solar Options: For those who rent or have properties not suited for rooftop solar, Michigan’s community solar programs provide a flexible solution. Community solar allows multiple participants to invest in a shared solar array and receive bill credits based on their portion of energy produced.

These utility-specific programs provide Michigan residents with flexible options for going solar, regardless of property ownership or roof suitability.

5. Rural Energy for America Program (REAP) Grants and Loans

For agricultural producers and rural small businesses in Michigan, the USDA’s Rural Energy for America Program (REAP) offers grants and loans to help offset the cost of renewable energy systems, including solar.

Eligibility Criteria: This program supports renewable energy projects in rural areas or on agricultural properties.
Financial Assistance: REAP provides up to 25% of the cost of renewable energy systems in grant form, while loans cover up to 75% of project costs. Grants range from $1,500 to $500,000, while loan guarantees range from $5,000 to $25 million.
How to Apply: Interested applicants can find details and submit applications through the USDA website. The application process includes documentation of the project plan and a completed financial analysis.

With REAP, Michigan’s rural communities have powerful support to make clean energy more accessible and affordable.

6. Michigan Saves: Financing and Loan Programs

Michigan Saves is a nonprofit organization that offers low-interest loans for energy improvements, including solar. This financing option provides homeowners and businesses an affordable way to fund clean energy projects without upfront costs.

How It Works: Through Michigan Saves, customers can access financing with interest rates starting as low as 4.5%. Loan terms typically range from 12 months to up to 10 years, providing flexibility based on the borrower’s needs.
Eligibility: Available for residential and commercial property owners in Michigan, Michigan Saves partners with local lenders to make financing accessible and convenient.

As Michigan’s “green bank,” Michigan Saves bridges the gap for those who want to go solar but might not have the resources for an upfront payment.

Conclusion

In 2024, the combination of federal, state, and local incentives makes solar energy a financially viable and rewarding investment in Michigan. From tax credits and property tax exemptions to utility rebates and low-interest loans, these programs can help reduce both the upfront and long-term costs of solar installation. Taking advantage of these incentives can make going solar more affordable and help residents and businesses reach energy independence while supporting a cleaner, greener Michigan.

Michigan Solar Partners